SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT ------------- Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): October 18, 1996 BEACON PROPERTIES CORPORATION (Exact name of Registrant as specified in its Charter) Maryland (State of Incorporation) 1-12926 04-3224258 (Commission File Number) (IRS Employer Id. Number) 50 Rowes Wharf Boston, Massachusetts 02110 (Address of principal executive offices) (Zip Code) (617) 330-1400 (Registrant's telephone number, including area code) Item 2. Acquisition or Disposition of Assets Beacon Properties Corporation (the "Company") acquired a portfolio of two office buildings in Rosslyn, Virginia (the "Rosslyn, Virginia Portfolio") on October 18, 1996 for $99.1 million from LaSalle Fund II. This acquisition was funded by the Company's $300 million Credit Facility led by BankBoston Corporation. The Company and its affiliates are not related to any of the other parties to this transaction. The Rosslyn, Virginia Portfolio consists of (i) a 19-story office building located at 1300 North 17th Street built in 1980 comprising approximately 373,000 square feet and (ii) a 19-story office building located at 1616 North Ft. Myer Drive built in 1974 comprising approximately 293,000 square feet. Major tenants in the Rosslyn, Virginia Portfolio include the American Red Cross (approximately 75,000 square feet) and Price Waterhouse (approximately 74,000 square feet). The aggregate occupancy rate of the Rosslyn, Virginia Portfolio as of September 30, 1996 was approximately 97%. The Company based its determination of the price to be paid on the expected cash flow, physical condition, location, competitive advantages, existing tenancy and opportunities to retain and attract additional tenants. The Company did not obtain an independent appraisal on the Property. Item 5. Other Events The Company has entered into contracts to purchase eleven office buildings. New England Executive Park Portfolio: In November 1996, the Company entered into a contract to acquire a portfolio of office properties located in Burlington (suburban Boston), Massachusetts (the "New England Executive Park Portfolio"). The New England Executive Park Portfolio consists of nine of the thirteen buildings located in the New England Executive Park; the remaining four are owner-occupied. The purchase price of the New England Executive Park Portfolio is payable in two installments, approximately $75 million will be paid at the closing of the acquisition with an additional $17 million payable on November 30, 1998, contingent upon meeting conditions regarding occupancy or rental income levels at the property in 1998. The Company estimates that the aggregate purchase price for the New England Executive Park Portfolio, including the $17 million contingent payment, is approximately 60% of replacement cost. Following the consummation of the acquisition, the Company intends to invest approximately $1.5 million in capital improvements in the New England Executive Park Portfolio over the next three years, including roofs and upgrades to mechanical systems. The New England Executive Park Portfolio consists of nine office buildings comprising an aggregate of approximately 817,000 square feet. The buildings range in size from approximately 43,000 square feet to approximately 218,000 square feet and were developed between 1970 and 1985. Major tenants in the New England Executive Park Portfolio include the Federal Aviation Administration (approximately 114,000 square feet), Cayenne (approximately 63,000 square feet), Siemens Business Communications Systems, Inc. (approximately 51,000 square feet) and Sun Microsystems, Inc. (approximately 44,000 square feet). The aggregate occupancy rate for the New England Executive Park Portfolio as of September 30, 1996 was approximately 98%. 245 First Street: In October 1996, the Company entered into a contract to acquire 245 First Street located in Cambridge, Massachusetts for aggregate consideration of approximately $45 million in cash, approximately 90% of replacement cost. The 245 First Street property contains approximately 263,000 square feet and consists of (i) Riverview I, a six- story office building renovated in 1986 and comprising approximately 109,000 square feet and (ii) Riverview II, an 18-story structure built in 1985 comprising approximately 148,000 square feet. Riverview I and Riverview II are connected by a four-story atrium comprising approximately 6,000 square feet. Major tenants at 245 First Street include Open Market, Inc. (approximately 81,000 square feet) and Softkey International, Inc. (approximately 71,000 square feet). Softkey, and certain other tenants, sublease their space from Mellon Bank who leases approximately 148,000 square feet of the property. As of September 30, 1996, the occupancy rate for 245 First Street was 100%. 2 10960 Wilshire Boulevard: In October 1996, the Company entered into a contract to acquire 10960 Wilshire Boulevard located in Westwood, California for aggregate consideration of approximately $133 million in cash, approximately 80% of replacement cost. Following the consummation of the acquisition, the Company intends to invest approximately $1.8 million in capital improvements in the property. The 10960 Wilshire Boulevard property was built in 1971 and has undergone approximately $39 million of capital improvements since 1992. The property consists of approximately 544,000 square feet in a 23-story office building. Major tenants in 10960 Wilshire Boulevard include Saban Entertainment, Inc. (approximately 111,000 square feet), Philips Interactive Media of America, Inc. (approximately 95,000 square feet), BBDO Worldwide, Inc. (approximately 48,000 square feet) and Saltzburg, Ray & Bergman (approximately 31,000 square feet). As of September 30, 1996, the occupancy rate for 10960 Wilshire Boulevard was approximately 89%. Additional Offering: On November 1, 1996, the Company filed a prospectus supplement to its Form S-3 Registration Statement (No. 333-02544) with the Securities and Exchange Commission pursuant to which it proposes to offer 6,000,000 shares of common stock (excluding the underwriters' over-allotment option). Expansion of Board of Directors: Effective January 1, 1997, the Board of Directors of the Company will be expanded from seven to nine members when Dale F. Frey and Lionel P. Fortin become Directors. Mr. Frey is President and Chairman of the Board of Directors of General Electric Investment Corporation and Vice President of General Electric Company. Mr. Fortin serves as Senior Vice President and Chief Operating Officer of the Company. Item 7. Financial Statements and Exhibits (a) Financial Statements Under Rule 3-14 of Regulation S-X Statement of Excess of Revenues over Specific Operating Expenses of the Rosslyn Acquisition in Rosslyn, Virginia for the year ended December 31, 1995 and (unaudited) for the nine months ended September 30, 1996 Statement of Excess of Revenues over Specific Operating Expenses of the New England Executive Park in Burlington, Massachusetts for the year ended December 31, 1995 and (unaudited) for the nine months ended September 30, 1996 Statement of Excess of Revenues over Specific Operating Expenses of 10960 Wilshire Boulevard in Westwood, California for the year ended December 31, 1995 and (unaudited) for the nine months ended September 30, 1996 (b) Pro Forma Financial Statements Pro Forma Condensed Consolidated Balance Sheet as of September 30, 1996 (Unaudited) Pro Forma Condensed Consolidated Statement of Operations for the Nine Months Ended September 30, 1996 (Unaudited) Pro Forma Condensed Consolidated Statement of Operations for the Year Ended December 31, 1995 (Unaudited) (c) Exhibits 2.1 Purchase and Sale Agreement between LaSalle Fund II and Beacon Properties, L.P., dated as of September 20, 1996. 2.2 First Amendment to Purchase and Sale Agreement between LaSalle Fund II and Beacon Properties, L.P., dated as of October 2, 1996. 23.1 Consent of Coopers & Lybrand, L.L.P., Independent Accountants. 3 ROSSLYN ACQUISITIONS ROSSLYN, VIRGINIA STATEMENT OF EXCESS OF REVENUES OVER SPECIFIC OPERATING EXPENSES FOR THE YEAR ENDED DECEMBER 31, 1995 F-1 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Stockholders of Beacon Properties Corporation: We have audited the accompanying statement of excess of revenues over specific operating expenses of the Rosslyn Acquisitions in Rosslyn, Virginia (the "Properties") for the year ended December 31, 1995. This financial statement is the responsibility of the Properties' management. Our responsibility is to express an opinion on this financial statement based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the statement of excess of revenues over specific operating expenses is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the statement. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As described in Note 2, this financial statement excludes certain income and expenses which would not be comparable with those resulting from the operations of the Properties after acquisition by Beacon Properties Corporation. The accompanying financial statement was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission and is not intended to be a complete presentation of the Properties' revenues and expenses. In our opinion, the financial statement referred to above presents fairly, in all material respects, the excess of revenues over specific operating expenses (exclusive of income and expenses described in Note 2) of the Rosslyn Acquisitions in Rosslyn, Virginia for the year ended December 31, 1995 in conformity with generally accepted accounting principles. Boston, Massachusetts September 27, 1996 F-2 ROSSLYN ACQUISITIONS ROSSLYN, VIRGINIA STATEMENT OF EXCESS OF REVENUES OVER SPECIFIC OPERATING EXPENSES For the Year For the Nine Ended Months Ended December 31, 1995 September 30, 1996 ------------------ -------------------- (Unaudited) -------------------- Revenues: Base rent $12,602,024 $11,026,546 Recoveries from tenants 426,712 499,950 Other income 1,117,591 1,009,694 ----------- ----------- 14,146,327 12,536,190 ----------- ----------- Specific operating expenses (Note 2): Utilities 1,172,453 898,088 Janitorial and cleaning 500,759 426,513 Security 300,840 230,158 General and administrative 714,390 504,981 Repairs and maintenance 1,186,335 818,790 Insurance 143,743 108,327 Property taxes 911,665 707,796 Landscaping 26,707 32,665 ----------- ----------- 4,956,892 3,727,318 ----------- ----------- Excess of revenues over specific operating expenses $ 9,189,435 $ 8,808,872 =========== =========== The accompanying notes are an integral part of the financial statement. F-3 ROSSLYN ACQUISITIONS ROSSLYN, VIRGINIA NOTES TO STATEMENT OF EXCESS OF REVENUES OVER SPECIFIC OPERATING EXPENSES 1. Organization and Significant Accounting Policies: Description of Properties The Rosslyn Acquisitions (the "Properties") are located in Rosslyn, Virginia, consisting of two office buildings together encompassing approximately 666,000 square feet. Beacon Properties Corporation intends to acquire the entire fee interest in the Properties. Rental Revenues Rental income is recognized on the straight-line method over the terms of the related leases. The excess of recognized rentals over amounts due pursuant to lease terms is recorded as accrued rent. The impact of the straight-line rent adjustment increased revenues by approximately $505,000 for the year ended December 31, 1995. Risks and Uncertainties The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 2. Basis of Accounting: The accompanying statement of excess of revenues over specific operating expenses is presented on the accrual basis. This statement has been prepared in accordance with the applicable rules and regulations of the Securities and Exchange Commission for real estate properties acquired or to be acquired. Accordingly, the statement excludes certain historical income and expenses not comparable to the operations of the properties after acquisition, such as management fees, depreciation, amortization, and interest expense. 3. Description of Leasing Arrangements: The commercial and office space is leased to tenants under leases with terms that vary in length. Certain of the leases contain real estate tax reimbursement clauses, operating expense reimbursement clauses and renewal options. Minimum lease payments to be received during the next five years for noncancelable operating leases in effect at December 31, 1995 are approximately as follows: Year Ending December 31, - -------------------------- 1996 $15,485,000 1997 14,408,000 1998 13,952,000 1999 13,869,000 2000 12,714,000 Thereafter 26,860,000 As of December 31, 1995, two tenants occupied approximately 25% of leasable square feet and represented approximately 24% of total 1995 revenue. F-4 NEW ENGLAND EXECUTIVE PARK BURLINGTON, MASSACHUSETTS STATEMENT OF EXCESS OF REVENUES OVER SPECIFIC OPERATING EXPENSES FOR THE YEAR ENDED DECEMBER 31, 1995 F-5 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Stockholders of Beacon Properties Corporation: We have audited the accompanying statement of excess of revenues over specific operating expenses of the New England Executive Park in Burlington, Massachusetts (the "Properties") for the year ended December 31, 1995. This financial statement is the responsibility of the Properties' management. Our responsibility is to express an opinion on this financial statement based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the statement of excess of revenues over specific operating expenses is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the statement. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As described in Note 2, this financial statement excludes certain income and expenses which would not be comparable with those resulting from the operations of the Properties after acquisition by Beacon Properties Corporation. The accompanying financial statement was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission and is not intended to be a complete presentation of the Properties' revenues and expenses. In our opinion, the financial statement referred to above presents fairly, in all material respects, the excess of revenues over specific operating expenses (exclusive of income and expenses described in Note 2) of the New England Executive Park in Burlington, Massachusetts, for the year ended December 31, 1995 in conformity with generally accepted accounting principles. Boston, Massachusetts March 15, 1996 F-6 NEW ENGLAND EXECUTIVE PARK BURLINGTON, MASSACHUSETTS STATEMENT OF EXCESS OF REVENUES OVER SPECIFIC OPERATING EXPENSES For the Nine For the Year Months Ended Ended September 30, December 31, 1995 1996 ------------------ --------------- (Unaudited) --------------- Revenues: Base rent $11,990,549 $10,085,304 Recoveries from tenants 866,821 953,802 ----------- ----------- 12,857,370 11,039,106 ----------- ----------- Specific operating expenses (Note 2): Utilities 2,166,024 2,016,965 Janitorial and cleaning 682,271 570,074 Security 106,924 133,184 General and administrative 581,469 403,905 Repairs and maintenance 977,315 828,053 Insurance 103,854 71,578 Property taxes 1,623,541 1,218,045 Landscaping 181,496 177,812 Tenant services 528,211 452,264 ----------- ----------- 6,951,105 5,871,880 ----------- ----------- Excess of revenues over specific operating expenses $ 5,906,265 $ 5,167,226 =========== ============ The accompanying notes are an integral part of the financial statement. F-7 NEW ENGLAND EXECUTIVE PARK BURLINGTON, MASSACHUSETTS NOTES TO STATEMENT OF EXCESS OF REVENUES OVER SPECIFIC OPERATING EXPENSES 1. Organization and Significant Accounting Policies: Description of Properties The New England Executive Park (the "Properties") is located in Burlington, Massachusetts consisting of nine office buildings together encompassing approximately 817,000 square feet. Beacon Properties Corporation intends to acquire the entire fee interest in the Properties. Rental Revenues Rental income is recognized on the straight-line method over the terms of the related leases. The excess of recognized rentals over amounts due pursuant to lease terms is recorded as accrued rent. The impact of the straight-line rent adjustment decreased revenues by approximately $59,000 for the year ended December 31, 1995. Risks and Uncertainties The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 2. Basis of Accounting: The accompanying statement of excess of revenues over specific operating expenses is presented on the accrual basis. This statement has been prepared in accordance with the applicable rules and regulations of the Securities and Exchange Commission for real estate properties acquired or to be acquired. Accordingly, the statement excludes certain historical income and expenses not comparable to the operations of the Properties after acquisition, such as interest income, management fees, depreciation, amortization, and interest expense. 3. Description of Leasing Arrangements: The commercial and office space is leased to tenants under leases with terms that vary in length. Certain of the leases contain real estate tax reimbursement clauses, operating expense reimbursement clauses and renewal options. Minimum lease payments to be received during the next five years for noncancelable operating leases in effect at December 31, 1995 are approximately as follows: Year Ending December 31, - -------------------------- 1996 $13,639,000 1997 12,611,000 1998 7,916,000 1999 5,894,000 2000 3,694,000 Thereafter 1,936,000 F-8 10960 WILSHIRE BOULEVARD WESTWOOD, CALIFORNIA STATEMENT OF EXCESS OF REVENUES OVER SPECIFIC OPERATING EXPENSES FOR THE YEAR ENDED DECEMBER 31, 1995 F-9 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Stockholders of Beacon Properties Corporation: We have audited the accompanying statement of excess of revenues over specific operating expenses of the 10960 Wilshire Boulevard in Westwood, California (the "Property") for the year ended December 31, 1995. This financial statement is the responsibility of the Property's management. Our responsibility is to express an opinion on this financial statement based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the statement of excess of revenues over specific operating expenses is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the statement. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As described in Note 2, this financial statement excludes certain income and expenses which would not be comparable with those resulting from the operations of the Property after acquisition by Beacon Properties Corporation. The accompanying financial statement was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission and is not intended to be a complete presentation of the Property's revenues and expenses. In our opinion, the financial statement referred to above presents fairly, in all material respects, the excess of revenues over specific operating expenses (exclusive of income and expenses described in Note 2) of 10960 Wilshire Boulevard in Westwood, California, for the year ended December 31, 1995 in conformity with generally accepted accounting principles. Boston, Massachusetts October 29, 1996 F-10 10960 WILSHIRE BOULEVARD WESTWOOD, CALIFORNIA STATEMENT OF EXCESS OF REVENUES OVER SPECIFIC OPERATING EXPENSES For the Year For the Nine Ended Months Ended December 31, 1995 September 30, 1996 ------------------ -------------------- (Unaudited) -------------------- Revenues: Base rent $7,235,712 $8,079,023 Recoveries from tenants 244,198 214,671 Other income 1,375,672 1,182,788 ---------- ---------- 8,855,582 9,476,482 ---------- ---------- Specific operating expenses (Note 2): Utilities 934,425 770,730 Janitorial and cleaning 493,250 438,757 Security 281,647 221,185 General and administrative 816,298 479,066 Management fee 320,040 385,563 Repairs and maintenance 1,168,367 804,389 Insurance 319,717 78,590 Property taxes 1,011,358 761,920 Landscaping 43,403 36,777 ---------- ---------- 5,388,505 3,976,977 ---------- ---------- Excess of revenues over specific operating expenses $3,467,077 $5,499,505 ========== ========== The accompanying notes are an integral part of the financial statement. F-11 10960 WILSHIRE BOULEVARD WESTWOOD, CALIFORNIA NOTES TO STATEMENT OF EXCESS OF REVENUES OVER SPECIFIC OPERATING EXPENSES 1. Organization and Significant Accounting Policies: Description of Properties 10960 Wilshire Boulevard (the "Property") is located in Westwood, California consisting of one office building encompassing approximately 544,000 square feet. Beacon Properties Corporation intends to acquire the entire fee interest in the Property. Rental Revenues Rental income is recognized on the straight-line method over the terms of the related leases. The excess of recognized rentals over amounts due pursuant to lease terms is recorded as accrued rent. The impact of the straight-line rent adjustment increased revenues by approximately $894,000 for the year ended December 31, 1995. Risks and Uncertainties The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 2. Basis of Accounting: The accompanying statement of excess of revenues over specific operating expenses is presented on the accrual basis. This statement has been prepared in accordance with the applicable rules and regulations of the Securities and Exchange Commission for real estate properties acquired or to be acquired. Accordingly, the statement excludes certain historical income and expenses not comparable to the operations of the Property after acquisition, such as interest income and amortization. 3. Description of Leasing Arrangements: The commercial and office space is leased to tenants under leases with terms that vary in length. Certain of the leases contain real estate tax reimbursement clauses, operating expense reimbursement clauses and renewal options. Minimum lease payments to be received during the next five years for noncancelable operating leases in effect at December 31, 1995 are approximately as follows: Year Ending December 31, - -------------------------- 1996 $ 6,682,000 1997 7,610,000 1998 7,528,000 1999 8,373,000 2000 5,498,000 Thereafter 12,662,000 As of December 31, 1995, one tenant occupied approximately 17% of leasable square feet and represented 12% of total 1995 revenue. F-12 BEACON PROPERTIES CORPORATION PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION The following unaudited pro forma Condensed Consolidated Balance Sheet of Beacon Properties Corporation (the "Company") as of September 30, 1996, is presented as if the acquisition of the Rosslyn, Virginia Portfolio and the Pending Acquisitions had occurred on September 30, 1996. The pro forma Condensed Consolidated Statements of Operations are presented as if the Offering, the acquisition of the Properties acquired since January 1, 1995 (including Perimeter Center, New York Life and the Fairfax Virginia Portfolios) and the closing of the MetLife Mortgage loan, the acquisition of the Pending Acquisitions and related assumption of debt had occurred as of January 1, 1995; the Company qualified as a REIT, distributed all of its taxable income and, therefore, incurred no income tax expense during the period. In management's opinion, all adjustments necessary to reflect the above discussed transactions have been made. The unaudited pro forma Condensed Consolidated Balance Sheet and Statement of Operations are not necessarily indicative of what actual results of operations of the Company would have been for the period, nor does it purport to represent the Company's results of operations for future periods. F-13 BEACON PROPERTIES CORPORATION PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET September 30, 1996 (Unaudited) Beacon Properties Corporation Pro Forma Pro Forma (Historical) Adjustments Consolidated ------------- -------------- --------------- (dollars in thousands) Assets Real estate, net $ 974,676 $352,050(A) $1,326,726 Deferred financing and leasing costs, net 15,908 15,908 Cash and cash equivalents 16,751 16,751 Mortgage notes receivable 51,490 51,490 Other assets 29,292 (9,000)(B) 20,292 Investments in and note receivable from joint ventures and corporations 55,890 55,890 ---------- -------- ---------- Total assets $1,144,007 $343,050 $1,487,057 ========== ======== ========== Liabilities and Stockholders' Equity Mortgage notes payable $ 440,526 $ 440,526 Note payable, Credit Facility 18,000 176,670(C) 194,670 Other liabilities 27,293 27,293 Investment in joint ventures 24,467 24,467 ---------- -------- ---------- Total liabilities 510,286 176,670 686,956 Minority interest in Operating Partnership 70,098 70,098 Stockholders' equity 563,623 166,380(D) 730,003 ---------- -------- ---------- Total liabilities and stockholders' equity $1,144,007 $343,050 $1,487,057 ========== ======== ========== Notes: (A) Acquisition of Rosslyn, Virginia Portfolio, New England Executive Park, 10960 Wilshire Boulevard and 245 First Street. (B) Application of deposits. (C) Net Credit Facility utilized. (D) Net increase in stockholders' equity: Proceeds of Offering $177,000 Expenses of Offering (10,620) -------- $166,380 ======== F-14 BEACON PROPERTIES CORPORATION PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS For the Nine Months Ended September 30, 1996 (Unaudited) Beacon Fourth Quarter Properties New York Life 1996 Corporation Perimeter and Fairfax Va. Acquisitions Pro Forma Pro Forma Historical Center (A) Portfolios (B) (G) Adjustments Consolidated ------------- ----------- --------------- --------------- -------------- --------------- (dollars in thousands except per share amounts and shares outstanding Revenue: Rental income $ 97,308 $6,420 $19,098 $34,118 $156,944 Management fees 2,248 2,248 Recoveries from tenants 11,001 304 3,788 3,156 18,249 Mortgage interest income 3,567 $ 611(H) 4,178 Other income 7,585 208 845 2,639 11,277 -------- ------ ------- ------- ------- -------- Total revenue 121,709 6,932 23,731 39,913 611 192,897 -------- ------ ------- ------- ------- -------- Expenses: Property expenses 24,607 1,562 4,875 10,195 41,239 Real estate taxes 12,491 591 1,708 3,452 18,242 General and administrative 11,963 378 812 1,496 250(I) 14,899 Mortgage interest expense 20,739 1,461(C) 2,912(F) 9,391(J) 34,503 Interest--amortization of financing costs 1,618 15(D) 1,633 Depreciation and amortization 21,737 1,196(E) 4,374(E) 7,921(E) 35,228 -------- ------ ------- ------- ------- -------- Total expenses 93,155 5,203 14,681 23,064 9,641 145,745 -------- ------ ------- ------- ------- -------- Income from operations 28,554 1,729 9,050 16,849 (9,030) 47,152 Equity in net income of joint ventures and corporations 2,053 2,053(1) -------- ------ ------- ------- ------- -------- Income before minority interest 30,607 1,729 9,050 16,849 (9,030) 49,205 Minority interest in Operating Partnership (4,231) (1,432)(K) (5,663) -------- ------ ------- ------- ------- -------- Net income before extraordinary items $ 26,376 $1,729 $ 9,050 $16,849 ($10,462) $ 43,542(2) ======== ====== ======= ======= ======= ======== Common shares outstanding 39,233,255 Net income per common share $1.11 (1) Includes: Depreciation and amortization $2,998 Amortization of financing costs $673 (2) Company share of Operating Partnership is 88.49% See accompanying notes to pro forma condensed consolidated statement of operations. F-15 BEACON PROPERTIES CORPORATION NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS For the Nine Months Ended September 30, 1996 (Unaudited) (A) Results of operations of Perimeter Center for the period ended February 14, 1996. (B) Results of operations of the Fairfax County Portfolio and the New York Life Portfolio for the periods ended September 4, 1996 and August 15, 1996, respectively. (C) Net interest expense associated with the MetLife Mortgage Loan in the amount of $218 million based on a 7.08% interest rate for the period ended prior to March 15, 1996. (D) Amortization of the costs of obtaining the permanent financing at $1.2 million over 10 years. (E) Detail of depreciation expense by property is presented as follows: Basis Life Depreciation ----------- -------- --------------- Perimeter Center $287,130 30 yrs $1,196 ====== Fairfax County Portfolio $ 69,300 30 yrs $1,568 New York Life Portfolio 135,000 30 yrs 2,806 ------ $4,374 ====== Rosslyn, Virginia Portfolio 89,145 30 yrs 2,229 New England Executive Park Portfolio 67,500 30 yrs 1,688 245 First Street 40,500 30 yrs 1,013 10960 Wilshire Boulevard 119,700 30 yrs 2,992 ------ 7,921 ====== (F) Fairfax County Portfolio interest expense on debt assumed for period prior to acquisition: Principal Rate Expense ------------ ----------------- JOHN MARSHAL 21,068 8.38% 1,197 E.J. RANDOLPH (1) 18,016 7.44% 909 NORTHRIDGE 16,306 7.28% 806 ------ ----- 55,390 2,912 ====== ===== (1) Paid off by Credit Facility proceeds at closing. (G) Results of operations of the Rosslyn, Virginia Portfolio, New England Executive Park Portfolio, 245 First Street and 10960 Wilshire Boulevard for the nine months ended September 30, 1996. (H) Interest income related to the acquisition of the Rowes Wharf mortgage. (I) Additional general and administrative expense attributable to acquisitions. (J) Credit facility activity: Draw Expense Source/Use Date (Repayment) (Savings) - ------------------------------------ --------- ------------ ---------- March 1996 offering proceeds 3/4/96 $(21,300) $ (462) Fourth Quarter 1996 Acquisitions 4th QTR $176,670 9,853 ------ $9,391 ====== (K) Reflects decrease for minority interest (11.51%) in Operating Partnership. F-16 BEACON PROPERTIES CORPORATION PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS For the Year Ended December 31, 1995 (Unaudited) New York Beacon Life Properties Properties and Corporation Acquired Perimeter Fairfax Va. Historical In 1995 (A) Center (B) Portfolios (F) ------------- ------------ ------------ --------------- (dollars in thousands except per share amounts and shares outstanding) Revenue: Rental income $71,050 $5,339 $52,117 $30,623 Management fees 2,203 Recoveries from tenants 9,742 1,193 2,244 6,308 Mortgage interest income 2,546 Other income 5,502 26 862 1,111 ------- ------ ------- ------- Total revenue 91,043 6,558 55,223 38,042 ------- ------ ------- ------- Expenses: Property expenses 18,090 1,560 12,376 7,485 Real estate taxes 10,217 949 4,107 2,680 General and administrative 9,755 111 2,116 1,254 Mortgage interest expense 15,226 15,434(C) 4,438(G) Interest--amortization of financing costs 1,370 120(D) Depreciation and amortization 17,428 1,047(E) 9,571(E) 6,810(E) ------- ------ ------- ------- Total expenses 72,086 3,666 43,724 22,667 ------- ------ ------- ------- Income from operations 18,957 2,892 11,499 15,375 Equity in net income of joint ventures and corporations 3,222 1,338 ------- ------ ------- ------- Income before minority interest 22,179 4,230 11,499 15,375 Minority interest in Operating Partnership (4,119) ------- ------ ------- ------- Net income before extraordinary items $18,060 $4,230 $11,499 $15,375 ======= ====== ======= ======= Common shares outstanding Net income per common share (1) Includes: Depreciation and amortization Amortization of financing costs (2) Company share of Operating Partnership is 88.49% Fourth Quarter 1996 Acquisitions Pro Forma Pro Forma (H) Adjustments Consolidated --------------- -------------- --------------- Revenue: Rental income $36,894 $196,023 Management fees $ 723(I) 2,926 Recoveries from tenants 3,409 22,896 Mortgage interest income 3,027(J) 5,573 Other income 2,758 10,259 ------- ------- ----------- Total revenue 43,061 3,750 237,677 ------- ------- ----------- Expenses: Property expenses 12,594 52,105 Real estate taxes 4,540 22,493 General and administrative 2,198 750(K) 16,184 Mortgage interest expense 12,790(L) 47,888 Interest--amortization of financing costs 1,490 Depreciation and amortization 10,562(E) 45,418 ------- ------- ----------- Total expenses 29,894 13,540 185,577 ------- ------- ----------- Income from operations 13,168 (9,790) 52,100 Equity in net income of joint ventures and corporations 4,560(1) ------- ------- ----------- Income before minority interest 13,168 (9,790) 56,660 Minority interest in Operating Partnership (2,403)(M) (6,522) ------- ------- ----------- Net income before extraordinary items $13,168 ($12,193) $ 50,138(2) ======= ======== =========== 39,233,255 Net income per common share $1.28 (1) Includes: Depreciation and amortization $3,895 Amortization of financing costs $896 (2) Company share of Operating Partnership is 88.49% See accompanying notes to pro forma condensed consolidated statement of operations. F-17 BEACON PROPERTIES CORPORATION NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS For the Year Ended December 31, 1995 (Unaudited) (A) Results of operations of properties acquired during 1995 for the period prior to their acquisition: Wellesley Westlakes 75-101 2 Oliver Ten Canal Building 8 Building 2 Federal St. Street Park Total ------------- ------------- -------------- -------------------- --------- Revenue: Rental income $308 $1,010 $2,474 $1,547 $5,339 Management fees Recoveries from tenants 425 112 656 1,193 Mortgage interest income Other income 7 15 4 26 ---- ------ ------ ------ ----- ------ Total revenue 308 1,442 0 2,601 2,207 6,558 ---- ------ ------ ------ ----- ------ Expenses: Property expenses 61 413 573 513 1,560 Real estate taxes 20 89 505 335 949 General and administrative 8 27 18 58 111 Mortgage interest expense Interest--amortization of financing costs Depreciation and amortization 50 239 404 354 1,047 ---- ------ ------ ------ ----- ------ Total expenses 138 768 0 1,500 1,260 3,666 ---- ------ ------ ------ ----- ------ Income from operations 170 674 0 1,101 947 2,892 Equity in net income of joint ventures and corporations $1,338 1,338 ---- ------ ------ ------ ----- ------ Income before minority interest 170 674 1,338 1,101 947 4,230 Minority interest in Operating Partnership ---- ------ ------ ------ ----- ------ Net income before extraordinary item $170 $ 674 $1,338 $1,101 $ 947 $4,230 ==== ====== ====== ====== ====== ====== (B) Results of operations of Perimeter Center for 1995. (C) Interest expense associated with the MetLife Mortgage Loan in the amount of $218 million based on a 7.08% interest rate. (D) Amortization of the costs of obtaining the permanent financing at $1.2 million over 10 years. F-18 BEACON PROPERTIES CO RPORATION NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS For the Year Ended December 31, 1995 (Unaudited) (E) Detail of depreciation expense by property is presented as follows: Basis Life Depreciation ----------- -------- --------------- Previously Acquired Properties: Wellesley Building 8 $ 4,500 30 yrs $ 50 Westlakes Building 2 12,306 30 yrs 239 2 Oliver Street 16,174 30 yrs 404 Ten Canal Park 10,609 30 yrs 354 ------- $ 1,047 ======= Perimeter Center $287,130 30 yrs $ 9,571 ======= Fairfax County Portfolio $ 69,300 30 yrs $ 2,310 New York Life Portfolio 135,000 30 yrs 4,500 ------- $ 6,810 ======= Rosslyn, Virginia Portfolio 89,145 30 yrs 2,972 New England Executive Park Portfolio 67,500 30 yrs 2,250 245 First Street 40,500 30 yrs 1,350 10960 Wilshire Boulevard 119,700 30 yrs 3,990 ------- 10,562 ======= (F) Results of operations of the New York Life Portfolio and the Fairfax County Portfolio for 1995. (G) Fairfax County Portfolio interest expense on debt assumed: Principal Rate Expense ------------ ----------------- JOHN MARSHAL 21,068 8.38% 1,764 E.J. RANDOLPH (1) 18,016 8.25% 1,486 NORTHRIDGE 16,306 7.28% 1,187 ------ ----- 55,390 4,438 ====== ===== (1) Paid off by Credit Facility proceeds at closing. (H) Results of operations of the Rosslyn, Virginia Portfolio, New England Executive Park Portfolio, 245 First Street and 10960 Wilshire Boulevard for 1995. (I) Management fee from 75-101 Federal Street. (J) Interest income related to the acquisition of the Rowes Wharf mortgage. (K) Additional general and administrative expense attributable to acquisitions. (L) Credit facility activity: Draw Expenses Source/Use Date (Repayment) (Savings) - ---------- ---- ----------- --------- Offering proceeds March 20 ($ 58,000) ($ 1,065) Rowes Wharf mortgage Various 23,700 780 Westlakes Building 2 July 26 13,500 632 Offering proceeds August 31 (66,500) (3,652) 75-101 Federal Street and 2 Oliver Street September 29 39,000 2,397 Ten Canal Park December 21 11,000 882 March 1996 offering proceeds Full year ($ 21,300) (1,757) Fourth Quarter 1996 Acquisitions Full year $176,670 14,573 ------- $12,790 ======= (M) Reflects decrease for minority interest (11.51%) in Operating Partnership. F-19